Saturday, February 10, 2007

The Real Deal

2/12/07 The Real Deal

Molly Ivins: "We are the people who run this country. We are the deciders. And every single day, every single one of us needs to step outside and take some action to help stop this war. Raise hell. Think of something to make the ridiculous look ridiculous. Make our troops know we're for them and trying to get them out of there. Hit the streets to protest Bush's proposed surge."

Bush's proposed federal budget includes a cut of approximately $145 million for the Corporation for Public Broadcasting (CPB). That amounts to a cut of 25%.

"The trend towards private equity firms teaming up with management to 'steal' companies from their owners is alarming and we urge you to take a stand to ensure this does not happen at Lear," the chief investment officers of its second-largest shareholder, Pzena Investment Management, wrote to its board of directors this week.
"It makes no sense to me," Richard S. Pzena, one of the authors, told the Free Press on Friday. "I can understand why Carl Icahn wants to buy it at this price. And I also understand why the management wants to go along with it, because he's hiring them, and he's going to pay them a lot of money."

Babu Mandava and Prof Arogyaswami Paulraj founded company Beceem Communications, leader for Mobile WiMAX chipsets, announced a $40 million Series D-round of funding.
Teachers' Private Capital started the round and was later joined by NEC Corporation, a new investor in Beceem, adding to the company's list of strategic investors.
The funding will be used to accelerate the company's existing roadmap toward achieving robust growth in the WiMax market by investing in new product initiatives and strengthening Beceem's development capabilities for next-generation mobile broadband solutions.
The additional funding will also allow Beceem to continue to increase critical resources in support of its growing number of customer engagements.
All of Beceem's existing financial and strategic investors participated in the financing. The list of both new and existing investors in the Series D-round included: Global Catalyst Partners, Intel Capital, Khosla Ventures, KTB Ventures, Mitsui & Co. Technology Investment Group, NEC Corporation, DoCoMo Capital, Samsung Ventures, Sequoia Capital, Teachers' Private Capital, and Walden International.

Obama: "It is time to start bringing our troops home...Proposes troop withdrawal by March, 2008...touts universal health care by 2012.. "The ways of Washington must change." If this is his message, in my view, his run for the presidency is dead on arrival.

Hindalco Industries Ltd., the Mumbai aluminum and copper company, definitively agreed to pay $44.93 a share for Novelis Inc., the world's No. 1 producer of aluminum rolled products, the companies said. In a statement, they valued the deal at $6 billion, including $2.4 billion of debt. Novelis's U.S. shares closed Friday at $38.54; they had soared 24% two weeks ago when Novelis said it was in talks with potential buyers.

"We are witnessing an almost uncontained hyper-use of military force in international relations," Putin said. "One country, the United States, has overstepped its national borders in every way."

Oil Drum's Leanan: "The IEA has decided that non-OPEC output will in fact be some 1.1 million barrels short of what it was previously predicting in 2007. That is a 50% reduction from its previous 2.2 million barrel increase. Now, you might think this is not such a big deal being that we consume around 84.5 million barrels per day. But the IEA only made this forecast last July. It is not like the IEA do not have access to reams of information most mere mortals would love to get their hands on, they have loads of it.
But in 2005 they also predicted a near 2 million barrel increase in non-OPEC output. Then over the course of the year they consistently revised the figure, downwards of course. By the end of 2005 they had decided that rather than 2 million barrels extra per day there was in fact, well, no barrels extra per day."

Robert McHugh: "We've been researching and discovering that almost all the major stock market tops of the past century were marked by a Broadening Top pattern. This pattern, also know as a Megaphone, which also looks like a set of jaws, is uniquely characterized by two mirroring boundary lines. The top boundary line is ascending; the bottom boundary line is descending. What is amazing is that each boundary line has the same slope, one rising, the other falling. We found another one this week: 1965-66's pattern. Pure coincidence, however the 1966 top occurred exactly 21 years ago to the day, February 9th...These patterns were found in 1929, 1957, 1965-66, 1972-73, 1986, 1987, 1998-2000, and now 2004-2007. These were the big-boy tops of the past century. The Jaws of Death pattern. And, the punch line? We have the exact same pattern as these 7 other occurrences right now in the Dow Industrials."

Millions of dollars worth of oil is stolen daily in Iraq because of the absence of oil meters, a basic tool for preventing corruption, according to estimates by classified CIA and State Department reports, the Iraq Study Group Report, a former consultant to a U.S. oil company, and a former State Department advisor to Iraq's Oil Ministry. The annual thefts run into the billions of dollars and help fuel insurgents, sectarian militias, and corrupt officials as well as deprive the Iraqis of much needed money to run their struggling government according the findings of a six-month CBS 11 News investigation. "I would say probably between 200,000 and 500,000 barrels a day are probably unaccounted for in Iraq," says Mikel Morris who worked for the State Department's Iraq Reconstruction Management Organization (IRMO) in Baghdad.

China reports no agreement at the North Korean nuclear talks in Beijing.
A spokesman for the Chinese Foreign Ministry says, after a third day of talks, there are, quote "still fairly big differences among the different parties."

An AP-Ipsos poll found that three-fourths of people surveyed oppose replacing the dollar bill, featuring George Washington, with a dollar coin. People are split evenly on the idea of having both a dollar bill and a dollar coin.
A new version of the coin, paying tribute to American presidents, goes into general circulation Thursday.



From the latest BJ Services 10Q: "Warmer than normal winter weather conditions and the declining natural gas prices has caused our North America operations to have lower than earlier forecasted results. Despite this, we expect our Canada Pressure Pumping operations to improve in the second fiscal quarter of 2007 and expect modest improvement in our U.S./Mexico and International Pressure Pumping businesses during the second quarter of fiscal 2007...Operating income from our International Pressure Pumping operations increased 57% for the three months ended December 31, 2006, when compared to the same period in the prior fiscal year...During the latest quarter, year over year, revenue for tubular services rose 46%, process and pipeline services 19%, chemical services 60%, completion tools 22%, and completion fluids 3%...Operating income margin for the Oilfield Services Group during the first quarter of fiscal 2007 remained at 18%, consistent with that seen in the first three months of fiscal 2006...While revenue increased 29% for the three months ended December 31, 2006 compared to the same period in the prior fiscal year, operating income increased 44%." Since mid-Jan. it is no secret that the weather has turned significantly colder across the U.S. and the degree days have risen sharply over this period. It is not a surprise that natural gas has risen from roughly $6 to $8 during this period. In addition, we have seen crude prices rise from $50 to $60. At the same time, there has been little benefit to the oil and gas stocks as a group. BJ Services is no exception. In my view, you buy straw hats in the winter. That would apply to BJ Services. They can pay me now or they can pay me later. I'm patient.

The Organization of the Petroleum Exporting Countries saw 10 of its 11 members produce an average of 26.95 million barrels per day in January, down 50,000 b/d from December, Platts reported on Friday. "Firm prices near $60 mean the group's current production levels are not excessive relative to demand," said John Kingston, global director of oil for Platts.

Shares in Fortress, the private equity and hedge fund manager, soared on their New York debut, nearly doubling in early trading before closing up almost 70 per cent.

Doug Noland: "The bottom line is that the markets are now likely facing a bout of heightened uncertainty. The Credit default swap, CDO, and “credit arbitrage” markets have grown tremendously since the last bout of liquidity ambiguity. How these markets will operate in the event of some general financial sector tumult is all too unclear. That the “liquidity” markets are these days extraordinarily bifurcated between the loose corporate and “prime” mortgage arena and the increasingly tight “non-prime” creates significant uncertainty."

Bloomberg reported that David Walker, the head of the nonpartisan Government Accountability Office, said that while the federal government may balance its books within the next several years, that will do little to improve a long-term budget outlook he likened to ``fiscal cancer.''

Mike Burk: "On Thursday last week the S&P mid cap index (MID) completed a run of 10 consecutive up days, an occurrence seen only twice in the past 15 years...The market is still overbought, however, some of that overbought condition was relieved Friday and seasonality next week is positive. I expect the major indices to be higher on Friday February 16 than they were on Friday February 9."

Marsoft: "After posting spectacular increases in the third quarter of 2006, the dry bulk market continued to make impressive gains in the fourth quarter. By the end of the year, Cape spot rates had doubled relative to their mid-2006 levels, while rates for other bulkers were up by 50-80%. As the new year got underway, most dry bulk indicators remained robust, holding on to their late 2006 gains."

"Bush plans to eliminate the national deficit by 2012, which is fantastic," said Addison Wiggin. "But he only projects to cut the current deficit by 3.7% by the end of his presidency. I guess the other 96.3% will be up to his successor."

Rigzone: "Canada's oil companies are preparing themselves for possible tax increases and environmental controls from a Conservative government under pressure to enforce tougher policies on the industry."

BJ Tubular Services has been awarded a contract by Enventure Global Technology to provide casing make-up services for Enventure’s Solid Expandable Tubular (SET®) liners for approximately 30 wells in India.
The operation will be carried out in various wells and rigs in the Mumbai High Field offshore India. BJ will run depths ranging from 800 to 1,200-ft of Enventure’s openhole SET systems into each of the wells. BJ will provide services from its base in Mumbai, supporting Enventure’s three-year, multi-million dollar contract with a major Indian operator.

Panelists surveyed in the Blue Chip Economic Indicators newsletter said real gross domestic product, the government's broadest measure of economic output, would likely increase by 2.7 percent this year from last year.

Friday, February 09, 2007


2/10/07 Inappropriate

From Bloomberg: U.S. Defense Department officials acted inappropriately in preparing pre-war intelligence reports that may have exaggerated links between Iraq and al-Qaeda, the Pentagon inspector general found.
Two offices set up under then-Undersecretary for Policy Douglas Feith before the March, 2003 invasion of Iraq produced reports forming the basis of the key administration pre-war claim that Saddam Hussein was a threat to provide weapons of mass destruction to the terrorist group.
"While such actions were not illegal or unauthorized, the actions in our opinion were inappropriate'' because they didn't ``clearly show the variance with the consensus of the intelligence community,'' said a two-page executive summary of a report delivered to lawmakers yesterday.
"That's not much of a defense,'' said Senate Armed Services Committee Chairman Carl Levin, who requested the review with Kansas Republican Senator Pat Roberts, the former chairman of the Senate Intelligence Committee. ``That's the whole key, these were inappropriate,'' Levin said. ``We never claimed they were illegal."
Since when is appropriate the same as fabricating? Now you see another example of a do-nothing Congress.

Britain and France, the second and third-biggest European economies, racked up record trade deficits last year as an appreciation in the euro and the pound curbed export growth.

Alcatel-Lucent, the world's biggest maker of telecommunications equipment, will increase its planned job cuts by 39 percent to 12,500 after reporting a fourth- quarter loss and declining revenue.

Consumer confidence in February clocked in at 103, according to the RBC Cash Index. That was up from a buoyant 95.3 in January and was the best showing since September 2004. The president's job-approval rating in February sank to 32 percent, matching his lowest-ever marks, according to an AP-Ipsos poll. On the economy, 42 percent approved of the president's stewardship, while 55 percent disapproved, the poll said.

The RBC Expectations Index for February stands at 69.2, dropping morethan 14 points from its January level of 83.8. The downturn in theindex is due largely to a drop in expectations for the economy as awhole and for personal finances. This month, fewer than one in fourAmerican consumers (22 per cent) believe their local economy will bestronger six months from now (compared to 31 per cent in January),and just over one-third (36 per cent) believe their personalfinancial situation will be stronger six months from now (compared to40 per cent last month).

Circuit City is closing 70 stores and laying off 400 employees.

On Thursday evening there was a segment on Kong TV on a nasal mist to increase a woman's libido, Palatin's product in clinical trials. Here's the link. The Company recently completed two Phase 2 clinical studies of bremelanotide in ED patients and is currently conducting additional studies with its strategic development partner, King, and preparing for an end-of-Phase 2 meeting with the FDA.

According to rigzone, Nigeria has asked international oil companies to slash oil production by 370,000 bpd this month and 260,000 barrels a day next month, a source with one company said Friday, raising the prospect of OPEC output cuts accelerating against expectations.

Southwest Airlines Co. on Friday said it will resume service to San Francisco International Airport. The company said it is in talks with the airport and aims to return in early fall.

Lear Corp. said on Friday that it has accepted Carl Icahn's $2.31 billion cash buyout offer and may solicit alternate proposals for 45 days. Lear said shareholders would receive $36 per share under the deal.

When you look at the pieces of the Tribune Co., you realize a good deal of value is there. For example, Tribune's 31% stake in cable TV's Food Network, which analysts have valued as high as $1 billion.

According to TechCrunch, Photobucket has become the No.3 video posting site, behind YouTube (GOOG) and MySpace (NWS). The site is handling 35,000 video uploads a day even though it has only offered the function for the last nine months. And now the site is preparing to launch a technology that, according to TechCrunch, will offer a "tool to allow users to mash up videos, photos and music clips into a timeline, and add titles, transitions and other effects..."

On Friday, crude oil topped $60 a barrel for the first time in five weeks. March crude closed at $59.89 a barrel Friday. Prices ended the day up 18 cents to gain 1.5% for the week. March natural gas fell by 4.4 cents for the session to close at $7.827 per million British thermal units. It was up 4.7% for the week.

China, the world's fourth-largest economy, targets an 8 percent growth rate this year and is becoming more concerned over inflation, according to the central bank's quarterly monetary policy report. China will clamp down on credit growth and keep the increase in M2 money supply at 16 percent, the People's Bank of China said in statement posted on its Web site today.

Paul Petillo: "The Bush budget seeks to save money by cutting the delivery of groceries to over 440,000 needy elderly people. This program costs $20 per month per person or slightly over $100 million."

Brad Setser: "Remember, while investors are borrowing in low-yielding yen to buy high-yielding real, the Brazilians – whether the central bank or the finance ministry – are selling high yielding real debt to buy low-yielding dollars. If every yen that comes into Brazil is bought by the central bank and used to buy dollars, well, the net result is a yen funded purchase of US treasuries. That is the net global flow. The 2 and 20 crowd gets the interest rate on the real and the yen/ real risk. The Brazilian central bank pays the interest rate in real and gets the interest rate on dollars and the dollar/ real risk."

William Poole, the president of the St. Louis Fed: "Many companies made too many loans that were poorly documented and now those are coming home to roost as the mortgage interest rates went up."

April gold rose $9.50 and closed at $672.30 an ounce Friday, marking the contract's highest closing level since August. March silver added 14.5 cents to close at $13.915 an ounce, up 4% for the week. March copper finished at $2.5175 a pound, up 6.7 cents for the day to climb 3.9% for the week.

Tecumseh Products Co. has decided to close its manufacturing facility in New Holstein, Wis. in a two-stage process that will begin in mid-April. The company said it will lay off the 320 workers at the plant, which produces component parts for its gasoline engines.

Thursday, February 08, 2007

Same-Store Sales

2/9/07 Same-Store Sales

Cosco's same-store sales for January rose a disappointing 2%.

Wal-Mart sees their U.S. comp sales for February rising between 1-2%.

Nordstrom Inc. said January same-store sales rose 11% over year-earlier levels, and that is most impressive.

Target Corp. said January same-store sales rose 5.1%. The company forecasts Feb results to gain between 4-6%.

The Energy Department said natural-gas inventories fell 224 billion cubic feet for the week ended Feb. 2. Total stocks now stand at 2.347 trillion cubic feet, down 26 billion cubic feet from the year-ago level, but 378 billion cubic feet above the five-year average, the government data said.

Limited Brands Inc. said its January sales at stores open at least one year rose 11%. Excluding the fifth week in January this year and the gift card breakage adjustment from last year, the sales increase from the comparable four-week period last year was 14%. That's quite a performance.

Tribune Co. reported fourth-quarter net income rose 78% on 5.4% higher revenue. Earnings reached $239.1 million, or 99 cents a share, from $134.4 million, or 43 cents, in the year-earlier period. Earnings from continuing operations were 96 cents against 42 cents. The figures reflect charges totaling 3 cents a share and gains totaling 31 cents. A survey of analysts by Thomson First Call produced a consensus estimate of 61 cents for the quarter. Revenue rose to $1.47 billion from $1.39 billion. Thomson's survey estimated revenue at $1.43 billion. "Key factors" in the quarter "were improved results in broadcasting, strong interactive-revenue growth, and excellent expense control," Dennis FitzSimons, chairman, president and chief executive, said in a statement.

Toll Brothers Inc. reported that fiscal 2007 first-quarter home-building revenue fell 19% to $1.09 billion from $1.34 billion in the year-earlier period. The company said the backlog at Jan. 31, the quarter's end, was off 30% from a year earlier, at $4.15 billion. Toll's net signed contracts were valued at $749 million, down 34%. Net of cancellations, first-quarter contracts fell 33% to 1,027 units from 1,544 units in the first quarter of fiscal 2006. And Toll estimated that write-downs for the quarter would range from $60 million to more than $160 million. Chairman and Chief Executive Robert I. Toll said in a statement that "it appears that the pace of cancellations is starting to abate." The rate was 29.8% in the first quarter compared with 36.9% in the fiscal fourth quarter. But "we are still well above the Company's historical average of about 7%," he said.

Forbes article: Nearly one in five men in the U.S. suffer from erectile dysfunction, according to a recent study in the American Journal of Medicine. Some researchers have estimated that as many as 40% of U.S. women have low libido or inability to reach orgasm... Palatin Technology is developing a nose spray, called bremelanotide, to treat men and women with sexual dysfunction. Applied 10 to 15 minutes prior to sex, it travels through the central nervous system to increase blood flow in the penile or vaginal tissue. The company hopes to get FDA approval for men in 2009 and women around 2011. "On the female front, we've got a chance to be first to market," says CEO Carl Spana. "People wonder how many women will come in for treatment, but my gut tells me they will come in."

Heavy snowfall shut five British airports Thursday and forced the cancellation of some train service in England and Wales.

A U.S. military helicopter flying over farmland northwest of Baghdad crashed Wednesday, military officials said, killing all seven people on board. It was the fifth U.S. helicopter lost in the past three weeks and the second to crash in five days. Four U.S. Marines were killed in fighting in Anbar province, the military said Thursday. The Marines, who were assigned to Multi-National Force — West, died Wednesday from wounds sustained due to enemy action in two separate incidents in the insurgent stronghold west of Baghdad, according to a statement.
That brings the number of deaths for U.S. soldiers in Iraq to at least 3114. There has been a surge-- a surge in our troops perishing.

Eastman Kodak now plans to cut a total of 28,000 to 30,000 jobs, up from a prior projection for the layoff of 25,000 to 27,000 employees. The company said it eliminated 1,200 jobs in the fourth quarter, bringing the total-to-date reductions to 23,400 positions.

The number of workers continuing to collect unemployment benefits, meanwhile, fell by 54,000 to 2.49 million, the lowest since Jan. 13. The four-week moving average of continuing claims rose by 20,000 to 2.50 million, the highest since Dec. 16.

The National Weather Service predicted that below-normal temperatures will persist in most of the U.S. through 2/20.

HSBC warned that its US mortgage business would push group bad debt provisions for 2006 $1.75bn (£888m) higher than expected. HSBC said pressure on house prices and rising repayments had prompted it to review its level of bad debt charges. You think the housing market is still bottoming out?

Robert Shiller wonders if a sustained decline in housing prices is in our future.

The chief executive of Mexican state oil monopoly Petroleos Mexicanos on Wednesday said the company expects its Cantarell oil field to produce an average of 1.53 million barrels a day of crude oil in 2007, down from 1.79 million barrels a day in 2006. As Oil Drum points out, Mexican oil production decline means that 4 out of 5 major OECD producers are now in decline (Norway, UK, USA and Mexico), leaving only Canada with growing production.

Cisco Systems Inc. said senior executive Mike Volpi, 40, resigned on Thursday. Volpi, as general manager of the routing and service provider technology group, was responsible for all routing products and the company's strategy for the communications service provider market. He was also a key driver of Cisco's acquisition strategy and led 75 acquisitions between 1994 and 2001. He also was responsible for the Scientific Atlanta acquisition. I view this as a major loss for Cisco.

When the annual averages for 2006 were compared
with annual averages for 2005, productivity rose 2.2 percent in the business sector and 2.1 percent in nonfarm businesses--slightly less than the 2.3-percent gains in both sectors from 2004 to 2005.

Baker Hughes Incorporated announced that the international rig count for January 2007 was 972, up 21 from the 951 counted in December 2006, and up 67 from the 905 counted in January 2006. The international offshore rig count for January 2007 was 276, up 5 from the 271 counted in December 2006 and up 13 from the 263 counted in January 2006. The US rig count for January 2007 was 1,714, down 4 from the 1,718 counted in December 2006 and up 241 from the 1,473 counted in January 2006. The Canadian rig count for January 2007 was 568, up 112 from the 456 counted in December 2006 and down 92 from the 660 counted in January 2006. The worldwide rig count for January 2007 was 3,254, up 129 from the 3,125 counted in December 2006 and up 216 from the 3,038 counted in January 2006.

Brent Budowsky: "What has emerged in evidence so far, is not surprising, but it is astonishing. Vice-President Cheney was so deeply involved and obsessed with discrediting Joe Wilson that the impact and implications are enormous and underestimated.
The Vice President was choreographer of the attack on Wilson. He acted as though he was the deputy White House political director and the deputy White House press secretary. He was organizing meetings, drafting talking points and assigning which staff would talk to which reporter.
This is not what Vice Presidents do. This is more than an attack on his enemy Wilson. Most of us who have had high government positions have faced these situations, and launching a counter-attack could have been done far more discreetly and professionally.
Plus: the naming of the Plame name, at the very least, created harm to national security and was an unpatriotic act. The minute the Vice President, Libby and Rove knew Valerie Plame worked at the CIA in a bureau that insiders would know immediately was highly sensitive that without any doubt triggered red lights, immediately.
When we were writing the original indentities protection law, not one of us could have ever imagined that identity disclosers would be high officials in the U.S. government. The law was aimed at people very hostile to the U.S. who were acting in a manner that helped the KGB.
It was unthinkable to all of us that anyone involved in these disclosures, felonious or not, would be high in the U.S. government. Anyone who goes on television and says otherwise is a liar.
My theory, with substantial evidence to back it up, is that the danger of Joe Wilson was not the damage that Wilson's view did to the Administration policy. It was the danger that Wilson's work would unravel a long-term, well-planned, highly deceptive campaign that preceded Wilson's involvement to deceive the country to drive us to war.
Prediction: major plea bargaining either has begun, or will begin, before the verdict and watch out if Libby sings in a plea deal.
Prediction: the original defense argument that Libby was a fall guy for others will only anger and inflame the judge and jury. It is no defense to say that others might have committed similar or related crimes and that is the impression this argument created.
Watch this: the sequence of events that could be explosive includes a) the original Cheney deposition to Fitzgerald, then b) testimony on the record of extensive and absurd involvement by the Vice President to the micro-level on the attack against Wilson, leading to c) Cheney's testimony in the trial if it happens.
The prosecutor and jury will compare what Cheney said in the deposition, what facts emerged in the trial and Cheney's testimony at trial. Do not be surprised if the word pardon appears in the press, though the reaction would be as strong as the Saturday Night Massacre in the Nixon years.
The surprise: what will shock people will be when the Senate Intelligence Committee releases its report on pre-war intelligence, which was covered up by the committee's Republican leaders before the elections.
The Senate report will, I predict, show major deceptions that well preceded the events in the Wilson case. This will put the whole case in context. It will turn the spotlight on the misrepresentations prior to Wilson, that will explain the obsessive attack of Cheney and Libby against Wilson.
Fasten your seat belts.
Nobody is out of the woods yet, and these woods are dark and deep."

New Century Financial will need to restate several quarters because of "errors related to its allowance for loan repurchase losses." The company said it now expects 2007 loan production to be 20% below 2006 levels, vs. previous forecasts that it would be flat, as the level of early-payment defaults and loan repurchases have led to tighter underwriting guidelines.

Goldman Sachs has agreed to sell its commodity index to rating agency Standard & Poor's in a deal that some analysts say could change the way traders view the oil markets.

An article worth reading on the peak oil cris:

Colbert Report: "The only way to bring democracy to Iraq is to silence it here."

Gold for April delivery closed up $5.50 at $662.80 an ounce on the New York Mercantile Exchange. Silver closed up 6 cents at $13.77 an ounce. Platinum declined $4.70 to end at $1,198.30 an ounce. Palladium closed down $4.20 at $341 an ounce, and copper ended down 0.5 cent at $2.4505 a pound.

March crude rose $2 Thursday to close at $59.71 a barrel, the contract's highest closing level of the year. Occidental Petroleum Corp. said it would be unable to meet commitments to its customers after a fire led to the shutdown of most production from its Elk Hills field in California. There is no timeframe for resuming production at the field, which normally has output of 120,000 barrels of oil equivalent a day, said Occidental spokeswoman Susie Geiger. About 95 percent of output is shut in. Occidental spokeswoman Jan Sieving confirmed in an interview that the company declared force majeure. March natural gas gained 2.1%, or 16.2 cents, to close at $7.871 per million British thermal units.

Changes In The Wind

2/8/07 Changes In The Wind

Chicago real estate magnate Sam Zell has expressed interest in bidding for Tribune Co., the Los Angeles Times reported Wednesday, citing people close to the matter. The LA Times is a holding of Tribune. Zell, whose Equity Office Properties Trust is in a bidding war, approached the Chicago-based media company with a complicated proposal that may include taking an equity stake while adding debt to fund a large dividend for shareholders, the report said. Zell didn't respond to a request for comment, while a Tribune spokesman declined to comment. Tribune, which owns the Los Angeles Times and the Chicago Cubs baseball team, is expected to hold board and committee meetings on Feb. 12 and Feb. 13, sources have said.

Hutchison Telecom is planning to sell its 67% stake in Indian mobile operator Hutchison Essar via an auction, the Hindustan Times reported Wednesday, citing unnamed sources close to the deal. The report said there'd be four likely bidders: Vodafone Group, Reliance Communications, the Hinduja group and Essar.

BHP Billiton said that it would buy back $10 billion in shares and reported a 41% rise in first-half net profit.

Cisco's CEO Chambers forecast for third-quarter sales, excluding gains from last year's purchase of Scientific-Atlanta, was an increase of 15 percent to 17 percent. He predicted fourth-quarter growth of as much as 16 percent. Both are above Cisco's long-term forecast for growth of 10 percent to 15 percent.

Devon Energy added 427 million Boe through successful drilling (discoveries,extensions and performance revisions) in 2006. The company also acquired 106 million Boe in 2006, primarily through the purchase of Chief's Barnett Shale natural gas properties. Revisions, largely related to changes in year-end oil and gas prices, reduced 2006 proved reserves by 50 million Boe. Proved developed reserves were 1,674 million Boe at December 31, 2006, or 70 percent of proved reserves. Year-end reserves comprised 708 million barrels of crude oil, 8.4 trillion cubic feet of natural gas and 275 million barrels of natural gas liquids.

George Kleinman: "The commodity futures price you’re currently looking at is only a snapshot in time. It represents what the common wisdom is telling us today the consensus believes the future price will be. However, common wisdom isn’t always wisdom that will enrich you. It changes and is generally wrong (because the price today is just about never the price of tomorrow). Go your own way despite what the crowd may think."

Joe Duarte: "Iraq is now entering the realm of surreal, and is on the verge of total Disorder, such as what happens in the realm of physics when an object enters the event horizon, or the center of a black hole...the situation in Iraq, regardless of what anyone says at this point, looks ready to get even worse...The markets have yet to fully discount the potential for the outbreak of total Disorder in that corner of the world."

December was the 21st month in a row that the savings rate came in negative.

In Orange County, Ca skipped property tax payments are at the highest level since 1996.

India's economy is forecast to expand 9.2 percent, following a 9 percent gain in the previous year, the Central Statistical Organisation said in a statement in New Delhi.

U.K. retail sales for January increased at the fastest pace in six months.

Keane Inc. agreed to be acquired by Caritor Inc., a private San Ramon, Calif., information technology services provider, for about $854 million. The deal values Keane shares at $14.30 each in cash.

Philadelphia Federal Reserve President Charles Plosser warned that the central bank may have to raise interest rates further to contain inflation.

There was a better-than-expected 3% jump in productivity and a contained 1.7% rise in unit labor costs in the fourth quarter. Real hourly compensation increased 7.1% as consumer prices fell 2.2%. Compared with the same quarter a year ago, productivity was up 2.1%, while unit labor costs rose 2.8%. For all of 2006, productivity rose 2.1%, the slowest annual increase in 10 years. Unit labor costs rose 3.2%, the most since 2000.

Reuters reports that 8,000 workers left Ford in January as part of a buy-out offer aimed at cutting costs.

How much longer will record tight credit spreads and low volatility continue?

Whirlpool Corp. reported a 13 percent drop in fourth-quarter net earnings as demand softened in the United States, and cut its profit outlook for this year.
Whirlpool said it expected 2007 appliance shipments to decline 2 percent to 3 percent in North America, its biggest market, where sales have been hurt by the slow U.S. housing market.

Britain's poultry farmers are threatened by an international boycott that could wipe out exports of meat, eggs and live birds worth £400 million a year.

Vornado Realty Trust said on Wednesday it has terminated its cash and stock proposal to acquire Equity Office Properties Trust.

Oil Drum: "Global oil demand growth is seen rising 2% annually through 2011, the International Energy Agency said Tuesday, in a forecast that is more optimistic about the rate of future energy consumption compared with previous five-year periods, because of rapid growth in Asia. World oil consumption growth is expected to rise on average by 1.8 million barrels a day over the five-year period, from 84.5 million barrels a day in 2006 to 93.3 million barrels a day in 2011, the Paris-based IEA forecast in its medium-term report for 2006-2011."

The U.S. Air Force will deploy at Kadena base in Japan's Okinawa Prefecture its newest stealth fighter, the F-22A Raptor, for 90-120 days from around Feb. 10, the first time the plane will be fielded outside bases in the United States, a commanding officer here said Wednesday. Lt. Col. Wade Tolliver, commander of the 27th Fighter Squadron at the Langley Air Force Base in Virginia, told Kyodo News that the United States will deploy 12 F-22A planes and about 260 personnel, including about 20 pilots, at the Kadena Air Base...The F-22A Raptor was developed by defense contractor Lockheed Martin Corp. as an air superiority fighter and a successor to the F-15. It went into service with the U.S. Air Force in December 2005. The aircraft, which can evade radar detection, is equipped for ground attack, electronic attack and signals intelligence roles as well. It has high mobility at supersonic speeds and the ability to attack ground targets.

Nortel to cut 2,900 jobs.

The American Petroleum Institute reported a fall of 6.9 million barrels in distillate supplies for the week ended Feb. 2. The Energy Department had reported a decline of 3.7 million barrels. Motor gasoline supplies were down 3.1 million barrels, the API said, contrary to the government's reported rise of 2.6 million. Crude supplies climbed 1.5 million barrels, the API said, but the government said they rose 400,000-barrels.

Iran does not intend to comply with the requirements of a resolution by the UN Security Council demanding the Islamic Republic to suspend its uranium enrichment activities, a senior Iranian official said Sunday.

The U.S. Energy Information Administration (EIA) said on Tuesday that, due to OPEC output cuts, commercial oil stocks in industrialized countries would fall 900,000 barrels per day in the first quarter -- three times faster than average for the time of year.

Over 3,100 U.S. troops have died in the Iraq war. When are the troops coming home?

With credit card debt growing at the slowest pace in nine months, consumer credit debt increased by $6 billion, or 3% annualized, in December, less than half the growth of November, the Federal Reserve reported Wednesday. Total outstanding debt increased by $6.01 billion in December to $2.4 trillion after a $13.7 billion, or 6.9%, increase in November.

March crude fell $1.17 to close at $57.71 a barrel. April gold fell $1.40 to close at $657.30 an ounce Wednesday. March silver rose 3.5 cents to end at $13.71 an ounce, while March copper lost 1.7%, or 4.15 cents, to finish at $2.455 a pound.

Libby said he had forgotten that Cheney was his original source until finding his own handwritten notes on the conversation. The notes predated the Russert phone call by more than a month.

Albert Einstein: "Memory is deceptive because it is colored by today's events.”

Tuesday, February 06, 2007


2/7/07 Developments

Equity Office Properties received, and the board had approved, a higher bid for the company from Blackstone Group, valued at $55.50 a share cash, or about $39 billion.

Telecommunications gear maker Alcatel-Lucent could cut more than 20 percent of its world-wide staff, L'Expansion weekly said on Tuesday on its Website, citing industry sources. This would mean 15,000 to 20,000 jobs of which 1,500 to 2,000 would be in France.

Barry Ritholtz: "If we combine these two issues -- earnings decelerating below double digit gains, and valuations appearing reasonable only due to a skewing effect of 4 major stocks -- you have a recipe for an expensive, not a cheap market." This is a point John Hussman has been making for a long time.

George Ure: "My point is that the accounting basis of the federal government would land a private-sector accountant in jail if pulled with the IRS. Printing up money on an as-desired basis, might also draw Treasuries attention, unless of course, the Fools on the Hill sent the right paperwork. And that all starts with on and off budget accounting and a silly notion that paper + ink equals "money." If any of us tried it, paper +ink equals jail. Unless we were going for $2.9 trillion worth..."

MGIC Investment Corp., a Milwaukee- based private mortgage insurer, agreed to buy Radian Group Inc. for $4.9 billion in stock.
MGIC will exchange 0.9658 share of its stock for each share of Radian, the two companies said today in a statement. That values Philadelphia-based Radian at $60.78 a share, less than its Monday closing value of $60.84 on the New York Stock Exchange.

Leanan: "Meanwhile, Middle East trading sources said Saudi Arabia has steeply raised the amount of its jet fuel earmarked for the US military, which is expanding its presence in the Gulf.
They said state oil company Saudi Aramco may have put aside upwards of a million tonnes of the aviation fuel for possible use by the US military this year, compared with around 200,000 tonnes in 2006.
“I believe that Saudi Arabia was warned in advance of the increased US military activity starting early 2007 and may have allocated 1mn to 1.2mn tonnes of jet fuel for possible use by the US military during 2007,” one source said.
The Pentagon dispatched a second aircraft carrier strike group to the Gulf last month.
The Defense Energy Support Center (DESC), which oversees the Pentagon’s fuel purchases, said an increased presence would entail more fuel demand."

Japan's broadest index of future economic activity signaled for a second month that growth may slow in the world's second-largest economy. The leading index was at 25 percent in December, below 50 percent for a second month, the Cabinet Office said today in Tokyo.

The arctic cold front dipped into the nation from the Dakotas to New England. Water pipes burst and car batteries balked, forcing many businesses to close.
Winter is alive and well.

President Bush wants Congress to pony up $168 million next year to fund his proposed expansion of the Strategic Petroleum Reserve. As part of his strategy to bolster the nation's energy security, Bush has called for doubling the storage capacity of the nation's emergency oil stockpile.

Japan Airlines Co. announced Tuesday that it will cut 4,300 employees, or about 8 percent of its entire work force, by the end of fiscal 2009 after it reported a net loss for the most recent quarter.

David Michael Green: "You know your empire's crumbling when it's considered an achievement to pretend that you've halved the rate at which you're adding to the massive mountain of debt you've already accumulated."

Richard Daughty on Social Security: "Now, instead of using the average of the 10 highest quarters of income (which is how I remember it) to determine my benefit amount, they now average my income to include the time when I didn't make squat, like just out of high school! And I made practically nothing while in the Army, and, as a starving college student trying to make it on the GI Bill, I made nothing then, either! And graduate school was even worse! And now they are going to average my earnings to include all those ten lean years (a quarter of my working life when I made almost zero income), in calculating my benefit? I'm screwed!"

John Rubino: "We believe purchasing power risk to be a serious issue for today's cautious investors. Our concern is owed to a strongly-held belief that the value of the US dollar is likely to decline substantially in the not-too-distant future."

The Labor Department admitted that it had underestimated the number of jobs employers added to their payrolls during 2006 by a whopping 400,000. I wouldn't believe BLS for a second. Revisions are what they do best.

Wal-Mart Stores, Inc. today announced the beta version of its new video downloads service, now available at The beta service, powered by new technology from HP Video Merchant Services, includes more than 3,000 movie and TV titles from major Hollywood studios and television networks and offers customers the convenient option of downloading movies and TV shows to their personal computers for viewing on PCs, laptops and portable media players.

On Wednesday the weekly oil numbers are released. It is anticipated that
distillates will be down 3.2 million barrels. We'll see if that number is baked into
$59-60 oil. It's worth keeping an eye on the degree days at least until mid-Feb.

Steve Saville: "We expect to see a reversal in the liquidity trend -- from expanding to contracting -- during the first half of 2007; a reversal signaled, first and foremost, by the widening of credit and yield spreads."

Although online produces less than 10 percent of most newspapers' revenue, publishers say they're finding their way on the Internet. Their online ad sales are expected to grow 22 percent this year, says the Newspaper Association of America.

MLF Partners LP, an activist hedge fund run by Feshbach, returned 29% after fees in 2006, leaving it up more than 360% since he started it in late 2001, according to a letter he sent to investors last month. MarketWatch obtained a copy of the letter.

For your 2006 tax return, the AMT exemption amount for married taxpayers filing jointly is increased from $58,000 to $62,550 and for single taxpayers from $40,250 to $42,500.

For several years, Congress has avoided the AMT's impact on middle-class families by passing one-year patches. Bush's budget assumes no more patches after the 2008 tax year. He also assumes that new revenues from the AMT will help him balance the budget by 2012.
"The budget rests on the assumption that the AMT will be allowed to expire and affect more than 40 million households in 2012, something nobody believes would be allowed," said Robert Greenstein, executive director of the liberal Center for Budget and Policy Priorities, a research organization.
Bush takes a pass on how he thinks the AMT issue will be resolved. With each passing year it would rake in more revenues for the Treasury if left unfixed - $93 billion by 2012, according to the nonpartisan Congressional Budget Office. For years I have been writing about the AMT and the economic harm it has caused for the middle class. This tax is a growing cancer.

Bush has included in the budget a request to increase drug co-payments for non-disabled veterans to $15 from $8, as well as new enrollment fees for veterans seeking medical care. The annual enrollment fees start at $250 and rise to $750, based on a veteran's household income. The provisions would not apply to lower income veterans or those with service disabilities. In 2008, the proposed fees would raise $355 million. If this isn't BS, then what is?

Fortune reports India's Ranbaxy has confirmed that it is interested in buying the generics arm of Merck in the U.S., and the Aditya Birla Group is said to be eyeing Novelis, a Canadian aluminum company that has reported it is in talks about a possible sale.

"Even during a period when revenue fundamentals are excellent, few carriers generate the operating cash flow needed to fund large numbers of new aircraft without driving leverage higher," Bill Warlick, senior director of Fitch's U.S. Airlines and Transportation team, said in a statement. "U.S. carriers, especially the legacy airlines, will need to consider either financing new aircraft through debt or operating leases as a way to obtain new planes."

Venezuela's state-owned oil company Petroleos de Venezuela (PDV) has secured a $1 billion credit line in the international markets.

The Oil Drum: "The oil world seems to have learned how to get along with the prospect of war with Iran, which is to say that it is choosing to ignore it. The Bush surge in Iraq with the prospect of fresh and heavy fighting is old news. The news that Mexican production fell half a million barrels a day last year caused not a ripple. The shutdown of most of Nigeria’s refining capacity has evoked the equivalent of a mighty yawn. The fact that OPEC production fell last year, even before the production cuts announced in September began to take effect, evokes derision rather than worry. “OPEC just can’t get its act together.” The announcement in December by the Kuwaiti government that production had peaked and is now declining at the world’s second largest field, Burgan, passed without comment or even a blip in the price slide. The fact that Iran on current trends is set to become an oil importer in six or seven years causes not the least anxiety. The world’s oil replacement ratio, that is to say the percentage of consumption that is replaced each year with new discovery, has fallen to 30% and keeps falling. The truth of the matter is that the world is in the midst of an energy crisis, but neither the NYMEX nor the IPE seem to have noticed."

April gold climbed $2.60 Tuesday to close at $658.70 an ounce. March silver climbed 11.5 cents to end at $13.675 an ounce and March copper closed at $2.4965 a pound, up 3.3%, or 8 cents.

Gene Isenberg, Nabors' Chairman and CEO, commented on the Company's results. 'Our results for 2006 set all-time records in virtually every financial and operational metric. All six of our rig operating units achieved record levels of performance except Alaska, driving the Company's achievements. When combined with the record results of our Other Operating Segments, we achieved aggregate operating income of $1.5 billion, which for the first time delivered net income in excess of $1 billion. Most importantly, Nabors generated opportunities to increase its average capital employed by $1.75 billion during the year, maintaining a 22% return which should underpin future growth... Despite the muted results of the fourth quarter and a more tempered outlook for 2007, we still expect to achieve another record year, generally in-line with the more than 20% increase implied by consensus estimates. This healthy outlook stems from the limited downside in our US Land Drilling unit, new rig deployments, and the magnitude of price increases yet to be realized throughout our International, US Offshore and Alaskan rig operations. Any contraction in North American gas drilling will in all likelihood be shallow and brief given the rapid self-correcting mechanisms present in today's marketplace.'

March crude rose 14 cents to close at $58.88 barrel. March natural gas closed at $7.616 per million British thermal units, down 1.8 cents.

Monday, February 05, 2007

Around The Globe

2/6/07 Around The Globe

Dubai's ruler, Sheik Mohammed bin Rashid Al-Maktoum, vowed at a ceremony Saturday to make his emirate "a pioneering global city" that would be "free of the direct influence of oil price fluctuations." The occasion marked the launching of the so-called Dubai Strategic Plan -- an ambitious project to increase the real per capita gross domestic product, which takes into account inflation, of this Arab city from its current value of $31,000 to $44,000 in 2015. The increase would require a sky-high 11 percent annual GDP growth rate. Al-Maktoum said the non-oil sector now accounts for 97 percent of the emirate's total GDP -- a significant shift from 1975, when oil revenues made up 64 percent of the GDP.

Confirming a Wall Street Journal report, Triad Hospitals Inc. said it's agreed to be acquired at a price of $50.25 a share in cash, an acquisition premium of more than 16% over Friday's closing price of $43.27. The transaction with affiliates of CCMP Capital Advisors and GS Capital Partners carries a total value of about $6.4 billion, including some $1.7 billion of debt. Plano, Tex.-based Triad said its board has recommended that stockholders approve the merger agreement, terms of which permit the company to solicit third-party bids during the next 40 days.

U.K. homebuilder Barratt Development on said it made a recommended 2.2 billion-pound ($4.32 billion) cash and share offer for Wilson Bowden. Under the terms of the deal, Wilson Bowden shareholders will receive 950 pence in cash and 1.0647 new Barrat shares for each Wilson Bowden share.

State Street Corp. said it would acquire Investors Financial Services Corp. for about $4.5 billion in stock. The deal values Investors Financial Services at $65.01 a share.

Vornado's new proposal is for an up-front tender offer to buy up to 55 percent of Equity Office's shares for $56 per share in cash and then a follow-on merger that would pay out the share element.
The deal has been structured to ensure that the offer is worth $56 a share for as long as Vornado's shares are worth between $115 and $135 each.

Barry Ritholtz: "Its been a very long time -- 930 days -- since the Dow Industrials suffered a 2% one day decline; Not only has the S&P 500 gone almost four years without a 2% down day, it has been seven months since it has corrected 2% at all! This is the second-longest such period in 53 years."

Hundreds of Pearl Harbor Sailors are headed to Iraq. Two destroyers answered the call to duty Saturday, and a unexpected call it was. The Navy is calling a surge deployment
Destroyers Hamilton and Russell left today on this short notice deployment. Many of the sailors have only been back for a few months and they were not expecting to ship out so soon. Family members say that makes this even harder to deal with the situation.

Investor Carl Icahn is offering to acquire all of auto parts maker Lear Corp. for $36 a share in cash through his affiliate group, American Real Estate Partners LP.

John Hussman: "One ought to become concerned about risk when investors become convinced that it does not exist. There are certainly times when it appears easy, in hindsight, to make money in the stock market. The difficulty is in keeping it through the full cycle. The fact that over half of most bull market advances are surrendered in the subsequent bear doesn't sink in until after the fact. It's all fun and games until someone gets hurt...There is not a single instance in historical data since 1871 when the S&P 500 traded above 18 times record earnings and there was not a low a year or more later that erased every bit of advantage over Treasury bills. Not one...Simply put, there is no investment merit to the stock market at these valuations."

The Mills Corp. confirmed that it's received an acquisition proposal from a group including Simon Property Group and Farallon Capital Management LLC, its largest shareholder, that values the company at $24 per share in cash. Mills said its board will promptly consider the proposal but noted that its merger agreement with Brookfield Asset Management remains in effect.

Brookfield Asset Management Inc. agreed to acquire Longview Fibre Co. in a deal worth $2.15 billion, including assumed debt. The consideration values Longview shares at $24.75 each, compared to Friday's closing price of $21.01, up 21 cents.

The WSJ reports vacant U.S. homes for sale have climbed to their highest level in four decades.

Russia will ban British poultry imports from Tuesday to prevent the spread of bird flu, the country’s animal and plant health watchdog said on Monday.
Rosselkhoznadzor said in a statement the ban would apply to live birds, hatching eggs, poultry meat and all poultry products not subjected to thermal treatment, as well as poultry feed and equipment for keeping and slaughtering birds.

Red Kite Metals, part of a $1 billion hedge fund run by RK Capital Management LLP, lost about 30 percent in January as metals prices tumbled, said two investors in the fund.

In Brad Setser's astute blog, he relates these comments from
Andrew Rozanov: "I would like to commend those astute commentators who pointed out the direct relevance and central role of the forward currency swaps market in facilitating carry trades. It is arguably the easiest and most preferred method to put on a 'carry trade' by the leveraged community. It was described several years ago in a book written for a Japanese audience by a former Moore Capital trader, Ken Shibusawa, who currently runs his own hedge fund advisory firm in Tokyo (Japanese website for his company:"

The ISM non-manufacturing index rose to 59.0% from 56.7% in December. The new orders index was essentially flat at 55.4% vs. 55.6% in December. The employment index fell to 51.7% from 53.2%. The prices paid index fell to 55.2% from 59.&% in December.

According to Forbes, Monday is budget day in Washington, and to mark the occasion, President Bush is expected to send to Congress a pro-growth, low-tax document with some eye-popping numbers. Buried within it, according to a senior Democrat, will be a $784 billion item--for national defense. That'll be the figure everyone focuses on and that will be the President's biggest problem. That three-quarter-of-a-trillion dollar number is actually the total, according to House Budget Committee Chairman John Spratt, D-S.C., of four separate budget requests covering three different fiscal years--a base budget for FY2008, supplemental budgets for FY2007 and FY2008, and a partial supplemental budget for FY2009. But Democrats will certainly want to add them all together. "That is a huge sum of money for one budget cycle," Spratt says. "The president calls for us to rein in spending and then calls for a $784 billion increase in spending."
Defense accounts for about a fifth of federal spending. The core Pentagon budget for fiscal 2008 would increase to $481 billion, a record. In addition, the president is seeking an extra $100 billion this year and $145 billion next year for the conflicts in Iraq and Afghanistan and the broader war against terrorism.

"The president's budget is filled with debt and deception, disconnected from reality and continues to move America in the wrong direction," said Senate Budget Committee Chairman Kent Conrad, D-N.D.

DaimlerChrysler AG's Chrysler Group plans to cut more than 10,000 factory jobs and close at least two plants to return the U.S-based unit to profitability, the Detroit News said on Monday.

Michael Panzer: " Whether the difference comes down to supplemental appropriations for the war in Iraq or other off-budget expenditures, or obfuscation arising out of the fact that reported U.S. government deficits include the surpluses of the so-called Social Security Trust Fund, there seems to be a serious disconnect between the size of the cumulative federal deficit and how much money our nation has been borrowing."

April gold climbed $4.60 to close at $656.10 an ounce in New York Monday. March silver tacked on 18.5 cents to close at $13.56 an ounce, but March copper lost 0.65 cent to end at $2.4165 a pound.

MarketWatch reported U.S. and foreign banks tightened their credit standards for approving both individual and commercial real-estate loans in the fourth quarter of 2006, the Federal Reserve said Monday. In its January senior loan officer survey, the Fed reported 33% of banks made it tougher to get a commercial real-estate loan, while 18% of banks made getting a home-mortgage loan harder. At the same time, 41% of banks surveyed said home-mortgage loan demand has gotten "moderately weaker" over the past three months. Thirty-seven percent of banks also said commercial real-estate loan demand has weakened. The Fed's quarterly survey is based on responses from 57 U.S. banks and 22 foreign banks.

Bush proposed a 50-basis point cut in student lender rate subsidies as part of his budget for fiscal year 2008. You be the judge. Is funding education more important than funding Bush's war in Iraq?

March natural gas gained 15.8 cents to close at $7.634 per million British thermal units. March crude fell 28 cents to close at $58.74 a barrel.

Bombings and mortar attacks killed at least 74 people Monday across Iraq — all but seven of them in Baghdad. Nearly 1,000 people have been killed in attacks in the past week. I guess that doesn't qualify for civil war.

Sunday, February 04, 2007

Reality Sets In

2/5/07 Reality Sets In

More and more Medicare beneficiaries would have to pay higher premiums for coverage of prescription drugs and doctors’ services under President Bush’s 2008 budget, to be unveiled on Monday.

Brett Steenbarger: "In sum, it appears that when we have two-week strength in both the S&P 500 large caps and among the S&P energy issues, returns are noticeably subnormal over the next two weeks. When both the large caps and the energy components have been weak over a two-week period, returns are notably superior. "

Robert McHugh: "We've just witnessed such a rally from July 2006. The quality is suspect. Since the Dow Industrials bottomed on July 14th, at a closing low of 10,739.35, we have witnessed a 1,914.14 point rally into Friday, February 2nd's close of 12,653.49. However, the entire amount of that rally has occurred on simply 18 trading days of 80 point rallies or higher. Just 18 trading days out of 139 accounted for the entire rally since July 2006. That means that 121 of the 139 trading days since July 14th were a wash. If you look at those 18 trading days, only once was there a follow-through rally of more than 80 points the next day. These rallies were spaced apart by about 9 days on average. In other words, they occurred out of the blue, after almost two weeks of prices going nowhere."

Mike Shedlock: "The expectation was for 150,000 to 170,000 jobs. The number came in at at 111,000. So was the raw number a bad showing? To help answer that question let's take a look at birth/death adjustments...January and July are typically the revision months for the BLS. Given that many (myself included) harp about all the positive assumptions, this month we see a negative adjustment of 175,000 jobs. In spite of that significant downward adjustment, jobs still came in at +111,000. All in all that is a respectable showing. But what does it say about September through December? Hmm. The Birth/Death assumptions for those months were +221,000. In effect the BLS assumed 221,000 jobs were created in those four months but now it is saying that 79.2% of those jobs were fictional. But rather than telling us what months they were wrong about, we are left guessing."

Mike Burk: "In April 2004 the Russell 2000 (R2K) topped after moving upward for 8 consecutive days. After that high it fell 14.7% to its August 13 low. That is the only example I would find where the index made a significant top concluding with 6 or more consecutive up days.
On average the R2K moves upward for 6 or more consecutive days about twice a year and those moves are usually in the midst of a larger upward move...Next week is the week before the 2nd Friday in February during the 3rd year of the Presidential Cycle...Next week has been a strong week. The OTC has been up 73% of the time since 1963 and the SPX up 85% of the time. The 3rd year has been much stronger than the averages for all years. Over all years the OTC has been up 59% of the time and the SPX 56% of the time."

Clif Droke: "A bullish confirmation signal was generated in the Dow Jones Transportation Average on Friday. The DJTA finally closed above the 5,000 resistance level, which makes for an all-time high in this economically sensitive proxy. I've stated previously that a close above the 5,000 level would be a highly significant event, technically, and that it further holds the promise of further economic recovery as well as a continuation of the bull market in stocks."

The number of times "carry trade" appeared in news media hit record levels this week. It has been recently suggested that the yen is currently 15% undervalued.
An abrupt change in the value of the yen could create a significant rise in short-term volatility.

International Herald Tribune: "The size of the carry-trade is in dispute, as leverage is provided through derivatives, but naked exposure could be as much as $1 trillion. The carry-trade is a major contributor to the very low global cost of money and the collapse of the price of risk, which together have enabled global asset markets to rise almost in unison. This rise, most dramatically reflected in China and India, is potentially destabilizing. As for the carry-trade itself, a sudden reversal could be catastrophic. It is a gigantic gambling game, reflected in the dramatic increase in the balance sheets of investment banks and the explosion in assets of private equity and hedge funds. The phenomenon is also perpetuating global trade imbalances by allowing deeply indebted countries — including the United States and Australia — to continue to over-borrow."

The U.S. Treasury gross public debt now exceeds $8.7 trillion and the statutory debt limit is $8.965 trillion. Of course, those numbers have nothing to say about consumer installment debt approximating $2.4 trillion. When do numbers mean something? You tell me.

India's per capita income is expected to increase by 7 percent in the fiscal year ending in March, the first time in the past 15 years, according to the Economic Advisory Council (EAC) to Indian Prime Minister. The overall economic growth will reach 9 percent this fiscal year with a sharp increase of the saving rate, which will be 35 percent of gross domestic product (GDP), said Dr. C. Rangarajan, chairman of the EAC, at a meeting chaired by Prime Minster Manmohan Singh Saturday.